In the second part of this series, we consider the key changes that the Finance (Miscellaneous Provisions) Bill 2024 proposes to bring to the global business and financial services sectors. To receive our summary of the legislation when it is enacted in a few weeks, sign up for our email briefings.
Applications to the Financial Services Commission
To enhance the ease of doing business in Mauritius, the Bill proposes to establish a timeline of 10 working days for the Financial Services Commission (the "FSC") to process an application for a licence (including for the grant of a global business licence and for authorisation as an Authorised Company), subject to the following framework.
- Upon receipt of an application, the FSC will determine whether the application is complete. Unfortunately, the Bill as currently drafted does not provide a period within which the FSC must determine so.
- If the FSC requests further information in connection the application, the applicant will have 15 days to submit such information.
- If the application does contain the mandatory information and documents required by law or in the FSC's guidelines, or if the applicant does not submit the further information requested by the FSC within 15 days of the request, the application will be deemed to have been withdrawn.
- From the time that the FSC determines that the application is complete, the FSC will grant the application within 10 working days.
- This framework does not apply to (a) applications made prior to 01 October 2024; (b) applications for registration concerning initial token offerings or licences under the Virtual Assets and Initial Tokens Offerings Act; and (c) as may be specified in FSC Rules.
Post licensing fees
The Bill proposes to introduce post licensing fees that a licensee would have to pay to the FSC. The Bill specifically provides for such fees to be paid to the FSC upon an application being made to appoint a new management company or registered agent. The Annex to the Budget Speech also indicated that such fees would be payable in respect of post-licensing processes such as appointment of officers, directors, auditors, actuaries, new controllers, and beneficial owners. These fees will be specified in FSC Rules.
Remedies to prejudiced shareholders
Under section 178 of the Companies Act, shareholders, former shareholders and other entitled persons may apply to the court for equitable remedies where they consider that the affairs of the company have been, are being or are likely to be conducted in an oppressive, unfairly discriminatory and unfairly prejudicial manner. Such remedies include, where just and equitable, the court's alteration of a company's constitution, and restrictions on the company to further alter that constitution (section 179).
This cause of action is generally available (but not necessarily restricted) to minority shareholders, who are not in control of the affairs of the company. So far, the court has not been granted jurisdiction to entertain an action under sections 178 and 179 of the Companies Act in respect of Global Business Companies and Authorised Companies. The Bill proposes to allow these companies to incorporate these provisions in their constitutions.
Enhanced powers of the FSC
With the amendments proposed by the Bill, the FSC will have certain enhanced powers concerning its licensees:
- Qualified trustees: The FSC will be entitled to request qualified trustees to submit any recorded information on trust structures that they manage.
- Advertisements: The FSC will have the power to inspect any advertisement proposed to be published by persons holding any FSC license, authorisation or consent. Such persons must submit any proposed advertisement to the FSC at least 7 days prior to the date of first publication. If the FSC is not satisfied with the advertisement, it is empowered to require the person to amend, withdraw or refrain from publishing the advertisement.
- Private pension schemes: The FSC's approval will be required before private pension schemes alter their pension benefits by (a) converting the accrued benefits of a member in a defined benefit scheme and crediting the commuted value to the member's account under the subsequent defined contribution scheme or (b) shifting a member from a defined benefit to a defined contribution scheme for future service accrual, on the date on which the member's accrued pension benefits are preserved. Any approved alteration must be effected in accordance with the guidelines of the FSC.
- Financial crimes: The current legislation entitles the Chief Executive of the FSC to refer a matter to the Enforcement Committee of the FSC for such action as the Enforcement Committee deems fit if the Chief Executive has reasonable cause to believe that a licensee has committed a financial crime. The Bill proposes to widen this entitlement to include instances where the FSC believes that a licensee is in the course of committing a financial crime.
- Directions: The Chief Executive of the FSC will be empowered to give such written directions as he deems fit to a Global Business Company or an Authorised Company where he has reasonable grounds to believe that the company (a) has or is likely to contravene certain provisions of the laws of Mauritius, (b) is conducting its affairs in an improper manner or (c) is involved in a financial crime. The Chief Executive must give the company a reasonable opportunity to respond to the allegations in writing before giving such directions. However, if the Chief Executive believes that any delay in issuing the direction may cause severe prejudice to the company, the public or the financial services industry, he may issue the directions and then give the company the opportunity to respond to the allegations within 7 days of such directions.
Other regulatory matters
- Licensees to ensure that they promptly notify the FSC in case of a change of name. The FSC may require the submission of additional information and the payment of prescribed fees upon such notification.
- FSC to issue duplicate licenses where any original license is misplaced, lost or destroyed.
- A deadline of 6 months after the close of their financial year for Authorised Companies to file their annual financial summary or any other type of accounts, statements or returns with the FSC.
- Auditors of closed-end funds to be approved by the FSC and to hold reporting obligations to the FSC.
Tax matters
- Income from the sale of virtual assets and virtual tokens to be exempt from income tax
- Extension of the partial exemption regime to income derived by a company holder of a Payment Intermediary Services licence issued by the FSC
- Extension of the partial exemption regime to income derived by a company holding a Robotic and Artificial Intelligence Enabled Advisory Services licence issued by the FSC
The Bill also proposes to introduce a new corporate tax, namely the Corporate Climate Responsibility Levy, equivalent to 2% of the chargeable income of companies that have an annual turnover of over MUR 50 million. The extent to which this new tax will affect Global Business Companies and Authorised Companies is the subject of some discussion in the industry. We will share our views on this topic in our summary of changes affecting corporate tax.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.